Organisation is a process of dividing and combining efforts of a working group for making such joint efforts more productive, effective and fruitful.
Organisation allocates duties to the managerial staff. It adds certainty and promptness to the work to be done. It avoids gaps and overlapping functions.
It establishes a neat pattern of relationships among efforts to be put, jobs to be done and work to be performed. It ensures team-work. Organisation, thus, is a framework for the fulfilment of common aims.
Organising means bringing together the necessary men, machines, materials and money for the achievement of common objectives. It is concerned with the grouping of activities, allocation of work and assignment of duties and responsibilities among various individuals in the concern.
1. Introduction to Organisation 2. Definitions of Organisation 3. Concept 4. Objectives 5. Nature 6. Features 7. Importance
8. Process 9. Approaches 10. Principles 11. Analysis 12. Issues 13. Results of Good Organisation and Effects of Bad Organisation 14. Advantages of Organisation.
Organisation: Definitions, Concept, Objectives, Nature, Features, Importance, Process, Principles and Advantages
- Introduction to Organisation
- Definitions of Organisation
- Concept of Organisation
- Objectives of Organisation
- Nature of Organisation
- Features of Organisation
- Importance of Organisation
- Process of Organisation
- Approaches to Organisation
- Principles of Organisation
- Analysis for Organisation
- Issues in Organisation
- Results of Good Organisation and Effects of Bad Organisation
- Advantages of Organisation
Organisation – Introduction
Organisation is a process of dividing and combining efforts of a working group for making such joint efforts more productive, effective and fruitful. Organisation allocates duties to the managerial staff. It adds certainty and promptness to the work to be done. It avoids gaps and overlapping functions. It establishes a neat pattern of relationships among efforts to be put, jobs to be done and work to be performed. It ensures team-work. Organisation, thus, is a framework for the fulfilment of common aims.
As has been put by Satya Saran Chatterjee an “organisation is not only a mechanistic structure of duties, activities and relationship but it is as well a human organisation consisting of diverse social groups. Attitudes, aspirations, likes and dislikes of personnel play a great part in transforming the organisation as an organ of productivity and creating.”
Thus, according to him, organisation does -not provide only a mechanical structure but also take due note of human faculties. By doing this it encourages initiative and develops a responsible sense of duty in a personnel working for the organisation. This facilitates the growth of the company.
An effective and efficient organisation must have following:
1. Increases managerial efficiency,
2. Ensures an optimum use of human efforts,
3. Balances various activities proportionately,
4. Facilitates coordination,
5. Provides a better scope for adequate training,
6. Helps in identifying the pitfalls,
7. Develops the managerial skills,
8. Consolidates growth and expansion of the enterprise,
9. Prevents the growth of laggards, wirepullers, intriguers, and
10. Discourages and controls corrupt practices.
The organisation day by day is growing in stature and is assuming more importance in modern management because of the services it renders to the whole company.
Determination, listing, grouping, assignment of activities, allocation of duties and responsibilities and delegation of authority are a few of the steps which an organisation takes in order to facilitate smooth functioning of the company.
Organisation – Definitions
Organization exists to achieve something. These “something’s” are goals, and they are either unattainable by individuals working alone or if attainable individually, are achieved more efficiently through more effort. When people work together to achieve something through their coordinated and group effort, this is organisation.
Organization is the backbone of management. Organization facilitates attainment of the objectives of the enterprise. Organization facilitates the optimum use of resources and developments.
Organisation facilitates growth and diversification; and stimulates creativity and innovation. Organization encourages better relations between the labour and the management. The term ‘organization’ connotes different things to different people. The dictionary definition is “something that is organized” – It could be a family, school, church or football team or it could be a Government, army, or corporation. It may be organized unit group, club with some specific purposes.
Organising is a basic managerial function. It is the backbone of management. It is the foundation upon which the whole structure of management is built.
Without efficient organisation, no management can perform its functions smoothly. A sound organisation contributes greatly to the success of the enterprise.
Organising means bringing together the necessary men, machines, materials and money for the achievement of common objectives. It is concerned with the grouping of activities, allocation of work and assignment of duties and responsibilities among various individuals in the concern.
In a static sense, an organisation is a structure manned by individuals who work together towards a common goal. In a dynamic sense, organisation is a process of welding together a frame work of positions to achieve the objectives of an enterprise.
Louis A. Allen – “Organisation is the process of identifying and grouping the work to be performed, defining and delegating responsibility and authority, and establishing relationships for the purpose of enabling people to work most effectively together in accomplishing objectives.”
Theo Haimann – “Organising is the process of defining and grouping the activities of the enterprise and establishing the authority relationships among them. In performing the organising function, the manager defines, departmentalizes and assigns activities so that they can be most effectively executed.”
For seeking the common goals through group efforts, organisation is inevitable, because it spells out who does what and who reports to whom. Organization is a process of integrating, coordinating, and mobilizing the activities of members of a group for seeking common goals. It implies establishment of working relationships which is done by assigning activities and delegating authority.
According to L.F. Urwick, “Organizing is a process of dividing up of activities which are necessary to achieve any purpose and arranging them in a group which are assigned to individuals.”
According to Stephon P. Robbins, “An organization is a consciously coordinated social entity, with a relatively identifiable boundary, that functions on a relatively continuous basis to achieve a common goal or set of goals”.
The words consciously coordinated goals imply management. Social entity means that the unit is composed of people or groups of people who interact with each other. Organisation has a relatively identifiable boundary that differentiates who is and who is not part of that organisation. People have some continuing bond and organisation exists to achieve some common goals.
According to Louis A. Allen “Organising is a process of identifying and grouping the work to be performed, defining and delegating responsibility and establishing a pattern of relationship for the purpose of enabling people to work most effectively together in accomplishing objectives”.
According to Theo Haimann,” Grouping the activities of the enterprise is establishing authority relationship among them. In performing the organisation function, the manager defines, departmentalizes, and assigns activities so that they can be most effectively executed”.
Organisation – Concept: Organization as a Structure and Organization as a Process
Organization is defined on the basis of these aspects:
(1) Organization as a structure, and
(2) Organization as a process.
Organization recognizes the need for formally coordinating the interaction patterns of organisation members. Organisation is the network of horizontal and vertical relationships among the members of a group designed to achieve some common objectives. Organization is a pattern of formal relationships that govern the activities of people.
“Organization is no more than the framework within which the responsibilities of management of an enterprise are discharged.” Organization defines how tasks are to be allocated, who reports to whom, and the formal coordinating mechanisms and interaction patterns that will be followed.
According to James D. Mooney, “Organisation is the form of every human association for the attainment of a common purpose –” Thus, Organisation structure is the skeleton framework of business. Thus, organisation can be defined as a structure on which the authority and responsibility relationship is created and maintained. Organisation is a mechanism through which management integrates, directs, coordinates and controls the activities of the enterprise.
According to Louis A. Allen, “Organization involves identification and grouping the activities to be performed and dividing them among the individuals and creating authority and responsibility relationships among them for the accomplishment of organizational objectives.”
According to Koontz and O’Donnell,” Organizing involves the establishment of an intentional structure of roles by identifying and listing the activities required to achieve the purpose of an enterprise, the grouping of these activities, the assignment of such groups of activities to a manager, the delegating of authority to carry them out, and provision for coordination of authority relationship horizontally and vertical in the organization structure”.
As a process, Organizing is concerned with arranging in a logical and orderly manner all activities of the organisation.
The process includes:
i. The determination of the specific activities necessary to accomplish objectives;
ii. The grouping of activities and assigning these to specified positions/ persons;
iii. The creation of a network of positions for the purposes of planning, motivation, communication, and control.
The word “organization” may be used to refer to the process of organizing, the structure that evolves out of this process and the processes that take place within it.
Organisation – Objectives: Optimum Profit on Investment and Sustained Growth and Prosperity
Main objectives of the organisations are:
1. Optimum profit on investment.
2. Sustained growth and prosperity.
These are further explained:
1. Maximum/Optimum/Acceptable Profit on Investment:
An organisation is started with an investment in financial terms. The funds so invested have a cost. The fund is arranged from various sources, say banks, financial institutions, depositors, share holders. These investors anticipate adequate compensation for the money invested.
Therefore, the organisation, which has taken their money must utilise the funds effectively so as to earn sufficient profit and pay to the investors and also should be able to keep substantial savings for its own purpose and future investments for the better financial condition of the organisation.
2. Sustained Growth and Prosperity:
Organisation must carry on their activities effectively and efficiently in order to make continuous growth and prosperity of its own as well as the growth and prosperity of its associated persons, agencies, departments.
Objective of an organisation is to utilise the various resources effectively, economically and efficiently so that from its use good results are obtained and the organisation makes profit on the money invested. With this it pays well to its investors including the repayment of principal amount of the lenders.
It takes good care of its employees. It maintains its volume of output or services or it keeps the schedules for its contractual commitments in case of service or project companies. It delivers good quality of products or services to its consumers. It keeps satisfied its customers for volume, quality, service after sales and maintains the time schedule for its supplies and services.
It never fails with its statutory obligations in payment of government dues and taxes. It takes all precautions and protective measures to protect the environment in and around the organisation. It also takes all care of its obligations for the peripheral developments. While doing so, it never fails to forget the national responsibilities for the economic developments of the country.
Thus, with all these activities and its efficient performance, the organisation fulfills its objective of:
I. Making adequate profit on its investments and
II. Maintaining a sustained growth and prosperity of its own, as well as of all associated persons, employees, agencies, departments, etc.
Organisation – Features of Organisation as a Structure
Organizing is one of the basic and important elements or functions of management. To get things done by others, a manager has to organize their activities properly; so that objectives will be achieved easily. It is a goal-oriented process.
The main features of organisation as a structure are given below:
1. Goal-oriented Process – Organizing is a goal-oriented process. It is only to achieve certain goals that the process of organizing is conducted. The structure is designed so as to facilitate performance of large number of activities. The structure must reflect these objectives as the organisation has to achieve.
2. Group of Persons – Organisation is very often viewed as a group of persons contributing their efforts towards certain goals. Chester I. Barnard defined organisation as an identifiable group of people contributing their efforts. Organization consists of people and human resource; contributing their efforts collectively and pool their efforts in group in an organized way to achieve goals effectively.
3. Division of Labour – The work of an organization is divided into various functions. Organisation structure facilitates the division of labour, which simplify the work and provides the benefits of specialization.
4. Authority Relationships – Organisation view as a structure of relationships. The structure of authority relationships created by the management is referred to as ‘formal organisational structure establishes relationships between positions in the organisation.
5. Basic Functions of Management – Organizing is one of the basic and important elements or functions of management. To get things done by others, a manager has to organise their activities.
6. Communication – Organisation has its own channels of communication; on which various information flows upward and downward. Organisation facilitates communication through various channels; which are necessary for mutual understanding and co-operation among the members of an organisation.
7. Co-Ordination – Organisation is a mechanism for coordinating different activities and parts of an organisation so that it functions as an integrated whole. Organisation coordinates the various activities and sub activities of the organisation for the smooth functioning of the organisation.
8. Effective use of Resource – An organisation makes use of human and other resources effectively to achieve the objectives effectively. Organisation facilitates the use of different resources.
9. Organizing as a Continuous Process – Managers continuously engage in organising various activities of the enterprise. Organisation is a continuous process of creating harmonious authority responsibility relationship between specialized units.
10. Rules and Regulations – Organisation lay down rules and regulations to regulate the working pattern of the organization.
Organisation – Features: Division of Labour, Coordination, Accomplishment of Goals or Objectives and Authority – Responsibility Structure
To some other authors, an organisation is a system with inputs (men, materials and machines in case of business), and processes through which these are converted into outputs (e.g., goods and services, profits, etc.). However, whatever be one’s way of looking at it, there are some common features of all organisation structures.
(i) Division of Labour:
This is the basis of all organisations in as much as an organisation structure comes into existence when the total work considered necessary for the realisation of common objectives is divided into activities and functions. Such division becomes necessary because the work is too much for any single individual. In a business organisation, the work may be divided, say, according to functions like Production, Marketing, Finance and Personnel.
Having divided up the work for purposes of realising common goals or objectives, it becomes necessary to link up or integrate the various divisions, functions or activities so that all of them are unified and harmonised.
(iii) Accomplishment of Goals or Objectives:
An organisation structure has no meaning or purpose unless it is built around certain clear cut goals or objectives. In fact, an organisation structure is built up precisely because it is the ideal way of making a rational pursuit of objectives.
(iv) Authority-Responsibility Structure:
An organisation structure consists of various positions arranged in a hierarchy with a clear definition of the authority and responsibility associated with each of these. An organisation cannot serve certain specific purposes or goals unless some positions are placed above others and given authority to bind them by their decisions.
In fact, an organisation structure is quite often defined as a structure of authority-responsibility relationships. From these features of an organisation structure, it emerges that an organisation is a structure of positions arranged in a hierarchy for the pursuit of common objectives through specialisation and division of work.
Organisation – Importance
Organisation is a form of human association for the attainment of common objectives.
It has been playing a vital role in every walk of life which could be anlaysed as follows:
1. It facilitates the growth of the enterprise by increasing efficiency.
2. It encourages specialization.
3. It ensures diversification of activities.
4. It promotes technological improvements.
5. It helps innovations.
6. It encourages the optimum use of resources.
7. It motivates the workers through decentralization.
8. It stimulates creative thinking and initiative among the workers.
9. It provides training facilities and chances of initiative among the workers.
10. It creates team spirit among the workers.
11. It develops healthy human relations in the enterprise.
The following words of Andrew Carnegie, a great industrialist of the USA, clearly reveal the importance of organisation. He says “Take away our factories, our trade, our avenues of transportation, our money, but leave me with our organisation and in four years, I will have reestablished myself.”
Organisation – Process
(1) Dividing Total Effort into a ‘Whole’ of Inter-Dependent Parts:
To organize means to arrange different elements into a whole of interdependent parts. It also means putting person or things in their proper places and in relation to each other, so that the whole aggregate works as a coherent unit, with each person or thing having proper and well-defined tasks and activities to perform.
Peter Drunker has divided the organization process into three elements:
(a) Activity analysis,
(b) Decision analysis, and
(c) Relation analysis.
The important steps in organization process are as follows:
(2) Determining Tasks or Duties to be performed:
The ‘organization process’ begins once the objectives proposed to be accomplished by the organization have been determined. The first step in this process is to divide the total effort into a number of tasks and activities, each to be performed by a single individual or a group of individuals.
Specialization is the guiding principle in division of tasks and duties. If a worker (or group) performs the same task or duty over and over again, he will gain specialization in performing that task or duty. His specialization will result in avoidance of waste of time, energy and material.
Such wastage will definitely occur if he is made to perform different tasks or duties one after the other, in the process making him jack of all tasks or activities but master of none. You cannot have a competent foreman if he is asked off and on to sit in the administrative office and do filing of papers.
In a manufacturing concern, for example, the tasks may be divided and grouped into activities, each placed under the charge of a separate department. Activities to be performed by a department may be further divided and placed under different sections of the department. Thus, in production department, separate sections or sub-departments may be created for production-planning, engineering, research and development, purchasing, labor relations, and so on.
(3) Assignment of Tasks and Duties:
It involves selection of competent persons to manage the defined tasks or duties performed at each work-point. Of course, selection of such person should be based on his specialization in performing that task or duty.
(4) Delegation of Authority to Secure Performance of Tasks and Duties:
Along with the assignment of tasks or duties to any person or group of persons, he (or the group) should be delegated appropriate authority in respect of control and use of organizational resources to perform those tasks or duties. It would be unrealistic to expect an individual to perform the assigned task or duty if he does not have authority to secure performance from his subordinates or to use machines to perform the task or duty assigned to him.
Within the set-up of a company, all authority flows from the shareholders. Shareholders delegate authority to the board of directors who, in turn, delegate it to the Chief Executive Officer (CEO)—he may be managing director or general manager. From the CEO, authority will flow further downward to senior and middle-level managers and from them to operational managers.
(5) Selecting Right People for Right Jobs—No Square Pegs in Round Holes:
All managers are in the business of people. They need to find, retain and develop a staff of people who are competent to perform the tasks or duties assigned to them.
Before assigning a particular task or duty to an individual, the manager should thoroughly examine his technical competence, interests, and aptitude for the task or duty. If he selects an individual who lacks the technical competence, ability, or aptitude to perform that task or activity, his substandard performance will be blamed on the manager himself. Not just that, ill-effects of incompetent performance at any level will reflect at various levels.
It goes beyond providing adequate lighting, ventilation and right temperature at the work place. It includes efforts to create an atmosphere of mutual trust, fellow-feeling, and caring and sharing among workers.
For example, for efficient performance on the part of employees, it is necessary to locate the factory and office at a place which they find easy to reach on their own or by using public transport. Call Centers operated by Indian and foreign companies, for example, pick and drop employees at their door-step. This assures employees safe travel, particularly the women workers, who run the risk of being stalked and harassed by anti-social elements.
Besides, employees also need to be provided all necessary tools to perform their duties, namely, machines, furniture, stationery, and so on. Also very important is to give them a sense of belonging which will motivate them to put in their best performance. All this will help raise employee morale and help develop positive attitude among them.
Organisation – Approaches: Classical Approach, Human Relations Approach and Systems Approach
There is a limit to everything, and so it is to man’s capacity to work. Work is restricted owing to physique, brain-power, training, aptitude, time, place and a host of other factors. In a business, man’s capacity for work sooner or later is utilised to its utmost, and then comes the compulsion to seek assistance from others. When he receives assistance from others, he must decide how the work is to be allocated; he must pass down to others a part of the authority for running the business.
A business exists to show result in terms of profits. When an owner runs the business, he alone is responsible for the success or failure of his venture. When others join to assist him in his business, he must also see that his employees cooperate in a way that will contribute to the success of the business. He must, in other words, coordinate their activities.
When we say that there is a switchover from owner-managed business to a business where the task of management is shared by others, we bring to the surface the basic elements of organisation. We can now define organisation as the division of work among people whose efforts must be coordinated to achieve specific objectives.
Though the word “objectives” occurs at the end of the definition, objectives constitute the starting point for organisational planning. By the authority of many authors, we say an organisation is an “Open system.” For survival and growth, an open system interacts with its environment. In this process, it receives input from the environment, and disposes of output to the environment. Organisation, as an open system, must constantly adapt itself to changes in the environment.
The open system approach to organisational stresses, therefore, the need to define objectives in relation to the environment. The statement of objectives does not merely provide a basis for the division of labour, but rather it should be a creed for survival and growth.
The objectives are a pointer to the work to be done. The type of work will vary from level-to-level in the organisation. In our definition, therefore, the word “work” takes into its fold physical labour, mental activity and decision making. When work grows too much in volume, becomes too varied in character or too dispersed for one manager to handle, it must be divided.
Division of the workload solves the problem of one man’s inability to cope, but it creates the problem of coordinating the activities of the people amongst whom the work is divided, so that the objectives are achieved. To avoid duplication, omission and general confusion, activities must be coordinated.
“Organisation”, as we saw above, is “division of work”. But how do we break up work? What are the criteria for deciding that manager A is responsible for this part of the work and manager B of that part? What factors govern such decisions? The nature of work? The personnel available? Efficiency?
A precise answer to these questions would solve many organisational problems. As a start, we will consider three approaches to organisation which can be distinguished in the work of organisation theorists the classical approach, the human relations approach, and the systems approach.
1. The Classical Approach to Organisation:
The classical approach is based upon what is often called “Machine Theory”. The organisation is taken to be a machine, which is built according to a plan with rigid specifications. Just as the specifications are clear-cut and rigid, so the resulting organisation has clearly prescribed divisions of responsibility. It becomes static and inflexible.
Its strength lies in its ability to resist, rather than adapt itself to, internal and external pressures. In this approach, organisational planning gets condensed to the question which division of work gives the greatest efficiency? The desire for efficiency affects the decisions on organisational structure.
A central theme of the machine theory is the concept of the specialisation of tasks. Efficiency is the outcome of the subdivision of operation into their elements. The elements can be taught more quickly, and a high level of performance can be reached more easily.
Through specialisation, performance not only reaches higher levels but becomes standardised. One of the tools of the Classical school was time and motion study. Where standardisation of tasks is not possible as in the case of research, design and management, uniformity of practice supplies the answer. Company-wide practice is specified in such area as union negotiation, wage structure, and outside contracts.
Both standardisation of performance, and uniformity of practice presuppose the same form of central direction. The idea of central direction finds articulation in the two Classical concepts of unity of command and centralisation of decision making specialisation brings both a greater efficiency and a greater need for coordination. The strength of an organisation lies in its clarity, lack of ambiguity and rigidity.
Machine theory still finds favour with production-oriented companies, producing on a mass scale. The ideas underlying the Classical approach are still relevant when correlated with the other approaches towards organisation. In the thirties and forties, attempts to achieve the classical idea led to a great flurry of activity in work measurement, job definition, and organisational charting.
In the late forties, people noticed the suffocating nature of higher organisation cells and began to rebel against the routine and monotony of their constraining jobs. Moreover, the organisation tasks themselves began to change. The rigid, permanent organisation, with its fixed permanent work situations was left behind, survival demanded flexibility. It became clear that the real forces inside the organisation were change, conflict and interaction.
In brief, the Classical organisation conforms to a preordained order. The manager defined the tasks to be performed, then he collected the tools and the people he needed to get those tasks carried out. Then his job was complete. He had made it, forever and forever.
The advantages and disadvantages of the Classical structure can be summarised as follows:
1. It has widespread acceptance by businessman.
2. It is not cast in bronze; it can accommodate change when it arises.
3. It is easily understood and applied.
4. It works.
1. It is too mechanistic and ignores the major facts of human nature.
2. It is too structured to adapt to change.
3. Communication are hindered by formal directives and procedures.
4. It inhibits innovation.
5. It pays the job and not the man.
6. It relies on coercion to maintain control.
7. It is job-defensive and encourages “make work” practices.
8. Its goals are incompatible with those of its members.
9. It is simply out of date with the needs of this millennium.
Despite the shortcomings of the classical structure, it will be probably around for a long time to come. A recent survey of the Fellow of Academy of Management attempted to forecast the shape of organisation of the future. The results of the survey indicated a 75% probability prediction that the dominant organisational structure in 1985 would be a pyramid (classical).
2. The Human Relations Approach to Organisation:
The machine concept of organisation presupposes the availability of material. Organisational materials include human beings. And although we can specify and hope to obtain manpower inventory, it would be unwise to think that we could requisition a complete human being who will function exactly to our specification as we would expect a piece of metal to do in a machine.
Human relations approach follows the dictum “organisation is what its people are”. We consider people while designing an organisational structure. The behaviour of people in an organisation is the main object of study, and as a result of this study, conditions are prescribed under which people are more likely to cooperate in achieving the objectives of the organisation.
The realisation that the individual brings his own needs and values to the organisation is the starting point of the human relations approach. The specific needs of individuals are uniform only in their diversity. They can however, be classified as physical needs, security, self-actualisation. The order of these categories is significant.
According to the human relations approach, people try to satisfy their needs in the order of priority. The more our needs for physical well-being and security are satisfied, the more we feel the need to actualise our full potential.
The classical approach tends to recognise only the needs of lower priority — financial incentives, appeals to physical and, on occasions security, needs. The need for self-actualisation is, however, frustrated by standards, uniformity, specialisation and over-definition.
Since the central theme of the human relations approach is the diversity of human motives and behaviour, we cannot hope it to deliver a direct and explicit statement for organisational planning. Broadly speaking, the behaviours have stressed the need for showing greater concern for people who are being organised.
Essentially, the human relations approach is an attitude rather than a set of principles of organisation. It sounds a warning that human beings are not machines and so demand a different treatment. In the light of this, we can say that the needs and values of people must be taken into consideration and integrated with the needs and values prescribed by the objectives of the organisation.
3. The Systems Approach to Organisation:
A system is a set of interdependent parts which together form a unitary whole that performs some function. Essentially, the parts must be interdependent and/or interacting. A heap of components may form a “whole” but not necessarily a system unless arranged. Any system can be a subsystem of a larger system.
The systems approach views an organisation as a system consisting of five basic parts- input, process, output, feedback and environment. It defines organisation as a structured process in which individuals interact for objectives.
The machine theory reduced organisation to a process of converting of money, materials and labour into output of goods and services. The system approach emphasises the inadequacy of this as the basis of theory of organisation. An organisation is not a closed system, shut off from the environment.
It is an open system which includes all the processes necessary for its life and for its situation to the environment. The systems approach takes an organisation, to quote Katz and Kahn, “to be a structuring of events or happenings rather than physical parts” and it, therefore, has no structure apart from its functioning. Its contrast with the classical approach is obvious.
Organisations with open systems do observe the principle of feedback. Feedback consists of information not only about performance of the system but also about the environment and the effect of the systems products on the environment. Feedback is essential for survival. The receipt of feedback enables the organisation to maintain a state of dynamic steadiness. This too can be seen as direct criticism of the classical approach.
The systems approach assists in organisational planning by planning by paying attention to those parts of the environment which affect the achievement of objectives. The open systems approach leads to a more realistic strategy. It considers not only what an enterprise can do but also the effects of certain actions on the environment.
The systems approach, therefore, isolates certain important functions in the way of key decision areas. Thus, the organisation should be designed to facilitate decision making. But decision making itself depends upon the principles of feedback and feedback presupposes communication channels.
In brief, given certain objectives, the decisions to be made to achieve those objectives and the communication channels necessary for making those decisions should determine the organisational structure.
The individual parts of the organisation remained pretty much the same even in the newer models. What has changed profoundly, however, are the relationships among the parts. According to the old model, structure was the king. People, tools, even tasks and resources were subordinates to the structure. The systems model appreciates change in any part, with all the other parts capable of being modified to adjust to that change.
The three approaches to organisation suggest different areas in which the search for criteria of dividing work will find most success. These approaches are difficult to integrate completely. However, they entertain some basic propositions which most managers welcome.
We can summarise them as follows:
To attain certain objectives, a company has to perform a certain amount and type of work. The division of this work among the employees of the company should pay heed to-
(a) The exact nature and amount of work;
(b) The needs, values and capacities of the employees; and
(c) The decisions to be made and the communication channels necessary to enable the employees to make the decisions.
Organisation as a Dynamic and Human System:
An organisation can be broken down into at least four basic parts:
1. Tasks- The organisation builds things or provides service all with certain objectives in mind.
2. Structure- The organisation has some broad, more or less permanent framework, some arrangement of process and material resources and people in some sequence and hierarchy.
3. Tools- The organisation incorporates technological advance and provides tools that enable people or other machines to perform tasks. These tools also provided the means for administrative control.
4. People- The organisation is populated by people and so it is said, organisation is what its people are. These people are the doers of work.
Organisation – Principles: Overall Principles, Structural Principles and Operational Principles
The entire gamut of principles are classified into three categories.
A. Overall Principles:
1. Unity of Objective:
This principle requires that each and every segment in the organization should have a set objective. The activities and endeavours of employees in each segment should lead to the attainment of objectives of the segment as a whole. In other words, objectives of individual employees and departments concerned should be harmonized.
The objectives of various departments should be in harmony with overall objectives of an enterprise. In sum, the individual and department; departments and overall organization should be unified by respective common objectives.
The organization structure should be simple enough to be understood by all concerned in an organization. In other words, there should be fewer levels in an organization so as to facilitate easy supervision and free flow of communication in the organization.
The structure of an organization should be flexible enough to accommodate changes in the very organization structure. For example, some of the conservative organizations which pursue vertical structure are switching over to flat structure of organization which organized on team basis. In other words, the structure of the organization should be such that it can be redesigned in any format in response to changing times.
B. Structural Principles:
Structural principles have a bearing on the development of an organization.
1. Division of Work:
The total work to be performed for the realization of organizational objectives should be divided into departments based on specialized nature of work to be handled by each department. For example, in a hospital organization, departments likes outpatient, intensive care unit, pharmacy, paramedics, disease based department, general administration, catering, transport and so on are created.
2. Functional Definition:
The role and responsibility; of each individual worker in terms of designation, and the functions to, be performed by each functional department should be defined unambiguously. The authority and responsibility of each position should be spelt out clearly. For example, in a banking organization, role of branch manager, cashier, officer, accountant, sub staff, etc., should be clearly defined. This avoids overlapping of authority and duplication of work.
3. Unity of Direction:
Each group of activities having the same objective should have one head and one plan. It facilitates unification and coordination of activities at various levels.
4. Span of Control:
This principle indicates that there should be a limit to the number of persons who can be effectively supervised. The span can be narrowed for specialized work while it can be wider for non-specialised nature of work.
C. Operational Principles:
This principle emphasizes that each managerial position should be given adequate authority to carry out the functions assigned to; him. Similarly, subordinates should be given enough authority to perform the delegated work. In short, delegation means transfer of authority from superior to subordinates.
2. Scalar Principles:
The scalar chain represents a chain of authority and responsibility relationship among the managers and the subordinates. It means every superior should know who his subordinates are and every subordinate should know who his superior is. In other words, there should be clear cut chain of command. Every transaction in the organization should pass through this formal chain of command.
3. Parity of Authority and Responsibility:
This principle implies authority should be coequal to responsibility. If too much of authority is given to a person without corresponding responsibility, it would lead to autocratic style of leadership and misuse of authority. Similarly, too much of responsibility to a person without adequate authority may not enable him to discharge his responsibility.
4. Exception Principle:
According to this principle, only exceptional matters which are beyond the scope of authority of a manager should be referred to higher level authority. Routine matters should be dealt with the executives at the lower levels.
5. Unity of Command:
As per this principle, each department should be headed by a single boss. In other words, subordinates in a department should get order only from one superior. This would ensure discipline and facilitate fixing accountability.
Organisation – Analysis of Organisation According to Peter Drucker
Since the process of organising is related to specific needs and purposes, it is important that an organisation structure is created after a careful and comprehensive analysis of the needs of the proposed organisation.
To this end, Peter Drucker recommends three kinds of analyses:
(а) Activities Analysis:
The purpose of ‘activities analysis’ is to discover the primary activity of the proposed organisation, for it is around this that other activities will be built. In making this type of analysis, the manager responsible for organisation building and development will also determine what activities can be grouped together and how each activity needs to be emphasised in the organisation structure.
(b) Decisions Analysis:
At this stage the manager finds out what kinds of decisions will need to be made to carry on the work of the organisation. What is even more important, he has to see where or at what level these decisions will have to be made and how each manager should be involved in them. This type of analysis is particularly important for deciding upon the number of levels or layers in the organisation structure.
(c) Relations Analysis:
It will include an examination of the various types of relationships that develop within the organisation. These relationships are vertical, lateral and diagonal. Where a superior-subordinate relationship is envisaged, it will be a vertical relationship. In case of an expert or specialist advising a manager at the same level, the relationship will be lateral. Where a specialist exercises authority over a person in subordinate position in another department in the same organisation, it will be an instance of a diagonal relationship.
Organisation – Issues in Organisation
Organisation theory involves the analytical study of-
(1) The structure,
(2) The functioning or process, and.
(3) The performance, i.e., the contribution to the achievement of desired goals of the organisations, and
(4) The behaviour of groups and individuals within them.
Thus, while organising, management has to consider the structure, the process and the interpersonal relationship of people working in the organisation to achieve the stated objectives. Of course, the value of an organisation is determined by its performance in the accomplishment of its objectives. In the process of organising, we have to give special attention to some issues or interrelated problems.
A list of such issues is given below:
(1) Grouping (Departmentation)-
(a) Tasks to perform individual jobs,
(b) Jobs into sections (one section under one supervisor),
(c) Section into departments (one department in charge of one department manager),
(d) Sections and departments into larger or higher administrative units (one administrative unit under one divisional manager).
(2) Decentralisation of authority to the extent and in the way necessary for the accomplishment of results expected, and allocating specific responsibility and accountability for performance.
(3) Determining the number of levels in the managerial hierarchy by choosing relevant span of control.
(4) Establishing formal superior-subordinate relationships among employees so that each knows his role and status in the team.
(5) Use of staff specialists to assist line executives in management of business.
(6) Use of decentralisation and divisionalisation in the organisation structure.
(7) Organising work at shop of plant level in a scientific manner without offending human values.
(8) Provision of favourable organisational climate so that people are motivated to offer their best in achieving stated objectives.
(9) Designing communication systems for effective decision making, control and co-ordination.
(10) Building an overall organisation which can promote innovation and change as well as respond and adapt to the environmental changes or influences.
Organisation – Results of Good Organisation and Effects of Bad Organisation
Results of Good Organisation:
A good organisation actually achieves many more things than those outlined above. It is more than rewards to its framers, leaders and members.
In the words of Claude S. George, Jr. a good organisation typically:
1. Establishes for easier communication
2. Provides for easier communication
3. Eliminates jurisdictional disputes between individuals.
4. Helps, to develop executive ability.
5. Aids in equitable distribution of functions and/or personnel supervision.
6. Aids in equitable distribution of function and/or personnel supervision.
7. Aids in measuring a person’s performance against his charge and responsibilities.
8. Affords movement in the direction of the “ideal” Organisation in times of change.
9. Makes for closer co-operation and higher morale.
10. Points out “dead-end” jobs.
11. Delineates avenues of promotion.
12. Prevents duplication of work.
13. Makes growth possible with adequate control and without literally killing top executives through overwork.
14. Aids in wage and salary administration through forced job analysis and description.
Effects of Bad Organisation:
Organisation is not an end in itself but means to an end. The end is better business performance and better achievement of goals. A good organisation does not necessarily mean peak performance just as a good constitution does not guarantee a good ministry or good laws, or a just and moral society. But organisation structure is an indispensable means and a necessary foundation.
The consequences of bad organisation structure or symptoms of malorganisation are serious.
1. Decisions will be slow and poor in quality. There may be reasons for it – (i) Those who decide may be overloaded with work. (ii) The information required for decision making may not be readily available (iii) Decisions may be made at the wrong place or level.
2. Bottlenecks will appear in the flow of work leading to underutilization of resources and diseconomies of all kinds. There will remain a constant pressure for what Drucker calls “Frictional overhead”, for coordinators, expeditors or assistants with no other job than to help their superiors without much effect.
3. There will be lack of co-ordination, Functions will be performed haphazardly and loosely, causing anomalies and conflicts between departments.
4. None of the departments or sections will be able to perform its respective tasks and justify its costs. The net result will be shortfall in the realisation of overall objectives. The enterprises will be moving backward instead of forward.
Organisation – Advantages of Organisation
A sound organisation is a must for every enterprise not only for its continuity but also for its success. It is the backbone of management and without it, no management can manage the various operations of an enterprise. It lays down the basis for other managerial functions such as planning, direction, co-ordination and control. It is the means by which the problems of an enterprise relating to policies, procedures, operations and administration can efficiently be solved.
As Lounsbury Fish points out, “organisation is more than a chart. It is the mechanism through which management directly co-ordinates and controls the business. It is indeed the foundation of management.” Another management expert Kenneth C. Towe states that “a sound form of organisation is the answer to every business problem, that a poor organisation could run a good product into the ground and that good organisation with a poor product could run a good product out of the market.” With these general remarks, now we state here the important advantages of organisation.
1. Aid to Management:
Organisation aids management in accomplishing enterprise objectives. It helps management in performing other management functions such as planning, direction, delegation control, etc. It increases management’s efficiency and promptness, avoids delay and duplication of work and motivates the employees to perform their job efficiently. It lays solid groundwork for focusing the attention and action of management on the accomplishment of the objectives of an enterprise.
2. Facilitates Growth of Enterprise:
An organisation is concerned with activities such as recruitment of staff, delegation of authority, assignment of responsibility, co-ordination and control of activities at different work centres, etc. With these activities, the organisation provides a framework within which the company grows. Thus, organisation facilitates growth of enterprise.
3. Ensures Optimum Use of Human Resources:
Organisation affects human resources in a number of ways such as recruitment, training, placement of workers, bringing harmony in their efforts, improving the communication network and motivating them to improve their efficiency. All these ensure an optimum use of human resources of enterprise.
4. Stimulates Creativity:
Sound organisation stimulates creative thinking and initiative on the part of employees. Delegation of authority provides sufficient freedom to supervisors and this encourages initiative, creative thinking, resourcefulness, independent thinking, spirit of innovation and enterprise among them.
5. Adoption of New Technology:
A sound organisation structure facilitates the optimum use of technological improvements such as automatic techniques of production, control devices, computer system, etc.
6. Encourage Human Use of Human Resources:
A sound organisation provides for job rotation and job enlargement and makes jobs meaningful and interesting. It also provides for efficient methods of selection, training and promotion of employees. Further, it encourages people to work in a team and as human beings and not as machines. Thus, it facilitates human use of human beings.
7. Facilitates Stability of Enterprises:
A sound organisation has flexibility to adjust to the changes in the conditions, promotes effective leadership, promotes employee morale, provides for delegation of authority and develops co-ordination, co-operation and communication. All these factors assure stability to the enterprise.
8. Executive Development:
A sound organisation by providing for training of staff at different levels and by proper delegation and decentralisation, helps development of managers.
In short, a properly-conceived organisation structure facilitate effective communication, precise delegation, smooth management, proper co-ordination and control, closer co-operation, effective leadership, higher employee morale, managerial efficiency, steady growth and diversification, optimum use of human and other resources, optimum use of technological improvements, development of managers, creativity among the staff and accomplishment of enterprise objectives.